Local Business Cycles and Local Liquidity

Local Business Cycles and Local Liquidity

This study examines whether state-level economic conditions affect the liquidity of local firms. We find that liquidity levels of local stocks are higher (lower) when the local economy has performed well (poorly). This relation is stronger when local financing constraints are more binding, the local...

Full description

Saved in:
Bibliographic Details
Main Authors: BERNILE, Gennaro, Korniotis, George, Kumar, Alok, WANG, Qin
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2015
Subjects:
Market segmentation
liquidity
local bias
local business cycles
capital constraints
institutional investors
return predictability
Corporate Finance
Finance and Financial Management
Online Access:https://ink.library.smu.edu.sg/lkcsb_research/3666
https://ink.library.smu.edu.sg/context/lkcsb_research/article/4665/viewcontent/LocalBusinessCyclesLocalLiquidity_afv.pdf
Tags: Add Tag
No Tags, Be the first to tag this record!
Institution: Singapore Management University
Language: English
Description
Summary:This study examines whether state-level economic conditions affect the liquidity of local firms. We find that liquidity levels of local stocks are higher (lower) when the local economy has performed well (poorly). This relation is stronger when local financing constraints are more binding, the local information environment is more opaque, and local institutional ownership levels and trading intensity are higher. Overall the evidence supports the notion that the geographical segmentation of U.S. capital markets generates predictable patterns in local liquidity.

Similar Items